Benefit claimants are being left with no money at all for more than a fortnight because of a flawed benefits sanction regime, MPs have warned.

And a Commons inquiry called for the creation of a new independent watchdog to examine cases where people who had been stripped of benefits commit suicide.

The findings were published by the Commons Work and Pensions Committee, a cross-party committee.

They were welcomed by North East Chi Onwurah MP, Labour MP for Newcastle Central, who has been a critic of the sanctions regime and led a Commons debate calling for an end to the “demonisation” of claimants earlier this year.

Sanctions, when benefits are stopped, can be imposed when people claiming Jobseekers Allowance are deemed to be failing to prove they are looking for work. In some cases, this can mean they failed to take part in schemes run by contractors employed by the Government to help the unemployed, or to take part in work experience.

Officials can also impose sanctions on some people claiming Employment and Support Allowance who are considered to be ill or disabled but capable of working.

North East MPs have highlighted a series of wrong or apparently unfair decisions, including veterans injured in Afghanistan or Iraq stripped of benefits after they were told they were fit to work; aA Newcastle man stripped of benefits because he was accused of failing to seek work in the days after his father died, and a man in Bishop Auckland constituency who was a collecting a sick daughter from school and was accused of inventing a “fictional child”.

The Work and Pensions Committee called for a full independent review to investigate whether benefit sanctions are being applied fairly and proportionately.

MPs also said there was little evidence that sanctions actually made people more likely to find work rather than simply punishing them, and called for the Government to hold a study into the effect of taking benefits away.

They warned that special payments known as hardship payments to help people who were left with no money at all were often not available until 15 days after sanctions had been imposed.

And although the Department for Work and Pensions reviews cases where claimants commit suicide, the MPs said an independent body was needed to examine deaths of benefit claimants.

The report said: “Department for Work and Pensions should seek to establish a body modelled on the Independent Police Complaints Commission, to conduct reviews, at the request of relatives, or automatically where no living relative remains, in all instances where an individual on an out-of-work working-age benefit dies whilst in receipt of that benefit.”

Mrs Onwurah said: “I am glad that we have this report.

“When I raised the the sanctions regime earlier this year the Government was in denial and evasive.

I hope they will now answer for the destructive impact this has had on people’s lives.

“They have deliberately destroyed people’s lives and caused real suffering to some of the most vulnerable people in our society.”

Dame Anne Begg MP, Chair of the Work and Pensions Committee, said: “Benefit sanctions are controversial because they withhold subsistence-level benefits from people who may have little or no other income. We agree that benefit conditionality is necessary but it is essential that policy is based on clear evidence of what works in terms of encouraging people to take up the support which is available to help them get back into work.

“The policy must then be applied fairly and proportionately. The system must also be capable of identifying and protecting vulnerable people, including those with mental health problems and learning disabilities. And it should avoid causing severe financial hardship.